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the insider's pick of the week

Before buying stocks, the average investor will research all sorts of financial information, ranging from basic fundamental analysis, to technical analysis, to following analysts' recommendations on using hot stock tips. Unfortunately, many investors don't follow this advice properly, and fail to realize the importance of tracking Inside Trades .

Insider data is an excellent first look at selecting investments, and a valuable piece of information to use when following investment opportunities. Follow the AskMen.com tip checklist to properly use Insider Trading data.

keep an open eye

Insiders tend to react quickly with their transactions, and much earlier than anyone else. Trades by several insiders in their beaten-down stock does not necessarily mean they expect it to recover next week. This is more an indicator of longer-term value.

The signs are always more significant when more than one insider trades. A cluster of activity shows a strong sense of consensus of opinion regarding a company's prospects.

Insider buying is more significant than insider selling. There are numerous legitimate reasons for executives to sell shares; sending their kids to college, buying a new home, and the diversification of assets are just a few. On the other hand, there is generally only one reason executives buy their company's stock: they expect to make some money.

Insiders closest to day-to-day operations are the most important to watch. These include the chairman, president, CFO, vice presidents, and directors.

Transactions of Direct Holdings (the straightforward purchase of stock) are generally more important than transactions of Indirect Holdings (the purchase of options, or the purchase of stock through a family member).

The larger the transaction, the more significant it usually is. This not only relates to the actual dollar amount of the transaction, but also to the number of shares traded in relation to what the insider owns.

the insider's pick of the week

Now that you have an idea at how to value the importance of insider trading, take a look at AskMen.com's pick of the week. The company is called Charter Communications(Nasdaq: CHTR), trading at $14.32.

Charter Communications Holding Company is the fourth largest operator of cable television systems in the United States, serving approximately 6.2M customers. For the 9 months ending 9/30/99, revenues totaled $845.2M, up from $32.5M. Net loss before extraordinary item (non-recurring expense that appears once in a quarter- eg. the payout of a lawsuit) totaled $380.5M, up from $9.5M. These results reflect the acquisition of multiple cable companies.

Charter trades at 3.1 times its sales, and is near its 52-week low. The company is coming off a strong fourth quarter and is reporting growth in its average revenue per customer section. This is a good sign that management is tapping its existing customer base efficiently. Insiders think that Charter is a bargain. Executives have purchased more than 88,000 shares since late November at prices ranging from $14.99 to $19. For investors looking at Charter to earn a profit, don't hold your breath. The Street figures that the company will lose $2 per share during the course of the year.

There is no such thing as a risk-free stock investment. Charter Communications Holding Company is not a guaranteed short-term moneymaker, but when you have high level insider buying, you can be sure that in the long term, Charter Communications is a sure bet.